By Timothy J. Meenan, NAIFA-Florida Lobbyist
Session Dispatch # 3
The fourth week of the nine-week legislative session has come to a close; we are almost at the halfway point! Subcommittee meetings are winding down, leaving only the full committees to act on bills that were heard by the subs. Priority bills are heading to the chamber floors for a full vote as session shifts into high gear.
Florida’s Constitution Revision Commission (“CRC”) had its second public meeting in Orlando this week. The CRC meets once every twenty years to make changes to the Florida Constitution. The CRC has 37 total members who were appointed by the Governor, Speaker of the House, Senate President, Chief Justice, or Attorney General. After a round of public hearings, the Commission will propose a number of changes to the Constitution, which will then be voted on in 2018.
The meeting drew a wide array of public commentary. Over 300 citizens attended, and over 100 signed up to speak about a litany of different issues. However, only 26 of the 37 members of the Commission were in attendance, as many of them are legislators occupied with the session. The CRC’s next public hearings will be in Miami on April 6 and Boca Raton on April 17. The Commission is still ironing out organizational and procedural matters. We will continue to follow its progress.
Below is a summary of legislation we believe is of interest to NAIFA and its members:
I. NAIFA PRIORITIES
Agent Continuing Education
SB 986 (Stargel); HB 925 (Miller)
SB 986 and HB 925 are identical bills from the Department of Financial Services (DFS). We have worked with DFS and have included NAIFA priority language in the department’s bill package. The bills allow members of NAIFA Florida to receive up to two hours a year in continuing education credit for active participation in their professional or trade association. The bills include life, health and property insurance agents, public adjusters, and bail agents. To qualify, a member must attend four hours of association meetings every year to qualify for the two hours of Continuing Education.
The House bill was not heard in committee this week, but did have a committee reference removed. Now HB 925 must be heard by the Commerce Committee before it can head to the floor. The Senate bill passed unanimously with a second committee substitute this week out of the Appropriations Subcommittee on General Government; it has to be heard by the full Senate Appropriations Committee before it reaches the floor.
Prohibition on Unlicensed Transactions of Life & Health Insurance
SB 986 (Stargel); HB 925 (Miller)
The bills include language prohibiting the unlicensed transaction of life and health insurance, which is a NAIFA priority. The bills clarify current law which allows employers, associations, trustees and other legal entities to explain insurance coverages to their employees or members without having a life or health insurance agent’s license. The amendment clarifies that those explaining coverages must be employees or members to qualify for the exemption from agent licensure.
The Senate bill passed unanimously with a second committee substitute this week out of the Appropriations Subcommittee on General Government; it has to be heard by the full Senate Appropriations Committee before it reaches the floor.
Motor Vehicle Insurance/ PIP Repeal Measure
SB 156 (Brandes);1766 (Lee, T); HB 461 (Hager); HB 1063 (Grall)
HB 1063 by Representative Grall has emerged as the main House vehicle for the PIP repeal initiative; none of the other bills in the House have moved.
The bill was reported favorably as a committee substitute out of the Insurance and Banking Subcommittee with a vote of 12 to 2. The bill repeals existing PIP law and requires 25/50 bodily injury coverage and does not require any MedPay coverage and also contains no bad faith limitations.
The Senate plans to hear SB 1766 by Senator Tom Lee on April 3 in the Banking and Insurance Committee. While this bill also repeals the requirement to carry minimum PIP benefits, the bills are not identical, as SB 1766 contains a medical payments component of $5,000. A linked bill includes a public records exemption for medical payment information held by the Department of Highway Safety and Motor Vehicles.
Transportation Network Companies (TNCs)
SB 340 (Brandes); HB 221 (Sprowls)
HB 221 (Sprowls-R) creates a regulatory framework for Transportation Networking Companies (TNCs) like Uber and Lyft. The bill addresses a number of concerns, including TNC operator insurance. The bill creates two different insurance standards for TNC drivers. Once the driver logs onto the service, the amount of coverage necessary changes based on whether or not the driver has passengers in the car.
The Senate bill passed unanimously by the Senate Judiciary Committee with no debate on March 28. The bill would require ride-sharing companies to carry $100,000 of insurance for bodily injury or death and $25,000 for property damage while the driver is logged onto the system but does not have a passenger in the car. During the period when a passenger is in the car, drivers would be required to have $1 million worth of coverage. SB 340 also required TNCs to have third party local and national criminal background checks conducted on all drivers.
The CS for CS for SB 340 is now in the Senate Rules Committee and will likely be heard during the sixth week of session. The main difference between the Senate and House bills is that the Senate bill requires the driver to have underinsured and uninsured motorist coverage; the House bill does not require UM or UIM coverage. The House bill, HB 221, was temporarily postponed on second reading on the House floor this week but is back on Special Order on April 4. We believe the House bill was temporarily postponed because Florida CFO, Jeff Atwater, is working on amending the enforcement provisions delegated to his office under the bill.
Pre-Owned Auto Inspection
SB 1316 (Bracy)/ HB 1299 (Dubose)
SB 1316 and HB 1299 allow insurers to opt out of inspection requirements for pre-owned motor vehicles. They also would allow insurers to establish their own pre-insurance inspection requirements if they should opt out. HB 1299 was amended and passed with a vote of 12 to 1 with a committee substitute through the House Insurance and Banking Subcommittee. The CS for HB 1299 amends the original bill and creates express authority for an insurer to elect not to participate in the required pre-insurance inspection. The amended bill limits the consumer’s expense to $5 in those instances where an insurer opts out of the inspection and the consumer implements their own inspections instead. The bill goes to the Commerce committee for its last stop.
The Senate bill is scheduled for a hearing by the Banking and Insurance Committee on April 3. These bills face opposition from the vendor with the inspection contract.
III. Property & Casualty
Unfair Insurance Trade Practices/ Rebate Bill
SB 1032 (Mayfield); HB 1029 (Yarborough)
SB 1032 and HB 1029 amend statute to permit an insurer or its agent to give certain promotional items to insureds, prospective insureds, and others for the purpose of conducting a promotional or advertising program. The bills limit the value of promotional items and prohibit items exceeding $100 in total value from being given. Further, the bills prohibit an insurer or its agent from giving an aggregate total value exceeding $100 in a single calendar year to a single individual. Previously the value was capped at $25 and limited to insurer or agent logo items only.
HB 1029 was passed unanimously by the House Insurance and Banking Subcommittee on March 27 and is now in its final committee of reference, House Commerce Committee. The Senate bill is scheduled to be heard on April 3 by the Senate Banking and Insurance Committee.
SB 420 (Brandes); HB 813 (Lee)
SB 420 and HB 813 mandate that the Florida Commission on Hurricane Loss Prevention Methodology to revise hurricane loss prevention models every four years. The House and Senate bills differ in two respects. One, the House bill requires a surplus lines insurer to be rated by A.M. Best in order to be eligible to write flood policies without a diligent effort and the Senate bill requires a rating from any rating agency acceptable to the OIR. Two, the House bill allows flood insurance policies to be exported to the surplus lines market without a diligent effort only until July 1, 2025 and the Senate bill allows this for an indefinite period.
The bills require an agent placing a policyholder with a private flood insurer to get a signed disclosure from the insured 20 days before the expiration of the Federal Flood Insurance policy explaining that if the consumer tries to go back to the Federal Flood Program, they may be subjected to significantly higher rates. We are working to switch this time frame to 20 days after the expiration of the policy.
The Senate bill is scheduled for a hearing on April 3 by Senate Community Affairs, its second of three committee stops. The House bill was approved by Insurance and Banking and moves next to the Commerce Committee.
HB 469 (Harrison); SB 334 (Steube)
HB 469 and SB 334 require courts to include interest on monetary damages and attorney fees that accrued during the pendency of the case in a final judgment. SB 334 finally passed out of the Senate Rules committee this week, after having been stuck in Rules for the past 3 weeks. Senator Bradley successfully filed an amendment to the bill which narrowed the scope of when prejudgment interest applies, but business and tort reform groups still oppose the bill, as amended. The initial Senate bill allowed prejudgment interest on economic and non-economic damages, attorneys fees, and costs to a prevailing plaintiff in any action. The narrowed bill allows for prejudgment interest to be assessed on economic damages and certain costs only.
SB 334 passed out of the Rules Committee by a vote of 10 to 1 with a committee substitute and is headed to the Senate Floor. CS for HB 469 has not been heard in over a month. This issue could also be amended onto PIP repeal legislation.
SB 1582 (Bradley); HB 7085 (Insurance & Banking Subcommittee)
HB 7085 addresses the recent decisions declaring some components of Florida’s Workers Compensation law unconstitutional. The bill would permit direct payments of attorneys by or on behalf of claimants and increases the total combined temporary wage replacement benefits (TTD/TPD) from 104 weeks to 260 weeks. It also allows a Judge of Compensation Claims (JCC) to award an hourly fee that departs from the statutory percentage based attorney fee schedule under certain situations. Among several other components, HB 7085 also permits insurers to uniformly reduce premiums by no more than 5% if they file an informational-only notice within 30 days. Insurance industry representatives believe that the ability of a judge to award additional attorneys’ fees makes this bill less than ideal, and likely means that litigation will continue to expand causing rates to increase.
SB 1582 seeks to stabilize worker’s compensation rates paid by Florida Businesses. The bill requires insurance carriers to authorize or decline requests for authorization from health care providers within a three-day period and provides that a request is deemed to be authorized if the carrier fails to respond. Like the House bill, the Senate bill increases the temporary partial disability benefits from 104 weeks to 260 weeks, in compliance with the Florida Supreme Court’s decision in Westphal v. City of St. Petersburg. SB 1582 retains the statutory fee schedule for setting claimant attorney’s fees but allows the JCC to consider certain factors and permit deviation from the schedule.
The House bill was scheduled to be heard by the Commerce Committee on March 29, but was removed from the agenda at the last minute; it has not been rescheduled at this point. The Senate bill was filed on March 14 and is scheduled for its first hearing on April 3 by the Senate Banking and Insurance Committee.
IV. LIFE & HEALTH
SB 1600 (Young); HB 1205 (Stevenson)
SB 1600 and HB 1205 revise the viatical settlement statutes making it more difficult for life settlement companies to engage in Stranger Originated Life Insurance (“STOLI”) policies. The bills define a STOLI and makes agreements to further or aid a stranger originated transaction void and unenforceable.
The bills provide a fix for decision in the Pruco case by specifically stating that a life insurer may contest a life insurance policy that was obtained in STOLI transaction after the two year incontestability period. The proposal needs to be amended to make clear that the two-year incontestability clause does not thereafter prevent an insurer from contesting the issuance of a STOLI policy on lack of insurable interest.
SB 1600 was reported favorably out of the Senate Banking and Insurance Committee with a committee substitute by a vote of 8 to 1. Senator Young filed an amendment to the bill to conform it to the House bill which extends the contestability period of viaticated life insurance policies from 2 years to 5 years. An amendment was filed by the Life Insurance Settlement Association (LISA) that would have require insurers to disclose to consumers their options to sell their policy when their life insurance policy is in a grace or lapse period. Ultimately, the insurance industry was successful in defeating the amendment and Senator Farmer, a trial attorney, withdrew it from consideration. The insurance industry testified against Senator Farmer’s amendment and told the committee the amendment was a ruse to get insurers to market products for the life settlement companies. Senator Farmer was the sole “no” vote in committee who opposed the bill for its lack of any disclosure provision.
CS for SB 1600 is now in Senate Appropriations with a reference to the Rules committee after that. The House bill unanimously passed its first committee stop in the Insurance and Banking Subcommittee. HB 1205 was opposed by LISA because of the provision implementing a 5-year ban on a consumer being able to sell a life insurance policy. HB 1205 heads to the House Commerce Committee next.
We are continuing to negotiate with LISA representatives to explore possible compromises.
Patient Savings Act
SB 528 (Steube); HB 449 (Renner)
These bills are commonly known as “Right to Shop” initiatives, which require health insurers to create a shared savings initiative program to encourage individuals to shop for high quality, lower cost services and share any savings accrued. The bills require insurers to establish methods by which insureds can request and obtain information on the contracted services and average prices for such services. Additionally, the bills require the insurer to post certain quality information on shoppable health care services and providers. The main component of these bills is the ability for the consumer to use the information provided by the insurer to shop around for better prices on certain services. If the insured shops around and obtains services for less than the average price for the service, the savings would be shared between the insured and the insurer.
While the bills sound like solid consumer measures in theory, they will likely have adverse effects on the quality of care for insureds in practice. By encouraging consumers to make health care decisions based on the potential to save money, the insured may opt for suboptimal care in hopes of a cash savings payment. This suboptimal care could lead to more services being needed down the road, ultimately costing the insured and insurer more money in the long run.
HB 449 passed its third of four committee stops this week with a third committee substitute. The bill heads to its fourth and final committee of reference, Health and Human Services. The Senate companion, SB 528, has not received a hearing in any committee. We believe that the House sponsor wants to work on the bill over the summer to improve it for next session.
Retroactive Denial of Claims
SB 102 (Steube); HB 579 (Hager)
SB 102 prohibits health insurers and health maintenance organizations from retroactively denying claims at any time if the insurer verified eligibility at the time of treatment. The bill passed the Senate Health Policy Committee, its 2nd of three committee stops and is awaiting a hearing in its final committee stop, Senate Rules. The bill’s identical House companion passed unanimously out of its first committee stop, Health Innovation, with a Committee substitute.
HB 579 still has to be heard by the House Commerce committee and House Health and Human Services Committee before reaching the floor.